Strategist, entrepreneur and commentator Craig Coogan examines issues with his unique perspective. NOTE: The views expressed in this blog are of the author (Craig Coogan) alone. They do not represent any organization, client, or business that he may be associated with. You are welcome to comment below. Thank you for reading!

Thursday, February 12, 2015

Let it Snow?

May 5, 1987 flurries fell in Syracuse. I was done with
Mother Nature and done with college. I headed west. Growing up in New England –
New Hampshire, Connecticut and Massachusetts – I am not surprised to find January
and February cold and snowy. It’s just what happens. Into my third year of
living in metro Boston I’ve lived through Super Storm Sandy, the Blizzard of
2013 that closed the City and now the Winter of 2015 that seems to have stymied
the most hearty New Englander. Three major storms/blizzards dropping some 76
inches of snow in downtown Boston and over 90 inches in other parts of the
state over a few weeks (with more to come) shows the practical application of the
role of Government.

During major storms the public looks to Government to
deliver basic services. Power is expected to be on, streets should be plowed
and public transit needs to work. No matter one’s political belief in the role
of Government – big or small – these expectations exist. When something doesn’t
work, most people are reasonable given the immediate circumstances but in short
order look to assessing blame, even when their own philosophy may have
contributed to the issue. When something collapses and fails miserably fingers
are pointed and how you see Government’s role becomes an important part of the
analysis and the way to fix the issue.

The City of Boston has been paralyzed – literally closing
for 4 days over a 2 week period. Sidewalks and side streets are afterthoughts
in the clean-up process and the basic infrastructure of getting around has
nearly collapsed.

The collapse of the MBTA system has become Example D’Jour. The
oldest public transit system in America the system is the fourth busiest in the country with over 2 million
passenger trips each day. 40% of low-wage workers in Boston and 30% of
other-wage workers rely on the “T” to get around town. The economic impact of
each snow day is not immediately known, but estimated at $200 million.

Many blame the T’s inability to function on a lack of
investment and a shrinking budget. The MBTA’s operating budget for 2015 is nearly $2 billion, up 164% from 10 years ago and up 269% from 1991
(according to MTBA’s budget document from their site.) Wages at nearly $500 million
is the number one cost, followed by debt service of nearly $425 million. The
debt was incurred as part of the Big Dig project where some stations had to be
moved and changed which saddled the MBTA with approx. $4 billion in debt. When
the debt was incurred, the funding mechanism for the T changed with a portion
of the state sales tax dedicated to supporting the system. 16% of the sales tax
is dedicated to the MBTA - $970 million in 2015’s budget. Since the restructured funding mechanism went
into place there has been $2.7 billion in principal payments made on the debt
and $4.9 billion in interest payments. The dedicated sales tax intended to
offset the additional debt costs has in the same period generated $15.8 billion,
leaving plenty to go towards operational issues. Ridership has stayed stagnant,
so the MBTA has not been starved financially since the increase in funding far
exceeds the increase debt costs.

“Since 1988, the MBTA has been the fastest expanding transit
system in the country, even as Greater Boston has been one of the slowest
growing metropolitan areas in the United States,” according to the Boston Globe in 2006.

The dramatic increases in funding have gone towards
expanding services – though the service still does not run late at night. A
one-year pilot program is ending that allowed trains and busses to run until approx. 2am. New lines
have been added. Maintenance has been neglected and is considered the cause of
why the trains can’t run on the tracks in the snow or cold. There is little capital investment - the
subway cars on the Red Line are 44 years old and on the Orange line 32 years
old. In a region that has the largest number of higher education institutions
than anywhere else on earth – the main form of public transport is as old as
those student’s parents.

The expansion has been at the expense of maintenance. The Boston Herald reported that In 2009 the MBTA recognized that it needed to catalog and identify all
areas of its system that were needed to be maintained. The Federal Government
agreed and provided a $1 million grant to build a system to centralize and
track of maintenance needs. Six years later the project is still not complete, the
MBTA has no idea of the scope of maintenance needs. That’s not a lack of
investment or interest, that’s a lack of
competence.

Everybody in Massachusetts has a vested interest in the MBTA
working. A Big Government philosophy includes additional taxes to provide funding
to the T to fix its problems. Smaller Government thinking would be more market
based with a solution built around existing resources. That battle will go on
and in Blue Massachusetts (even under a new Republican Governor) with a hybrid
is likely.

Whatever the fix winds up being: it needs to work. The
failure of the T is a case study in bad management over a long time and
multiple administrations that has ample funding and made strategic choices that
has resulted in a sub-par delivery of its core services. This is just the
latest example of why I advocate for less government funding and more market
based solutions. There’s plenty of blame to go around...it isn’t partisan. It’s
not unreasonable to expect a system that the people have funded to work. Even
in bad weather. Let it snow.